The Effect of Non-Contributory Pensions on Saving in Mexico

45 Pages Posted: 25 Apr 2017

See all articles by Jorge Alonso Ortiz

Jorge Alonso Ortiz

Instituto Tecnológico Autónomo de México (ITAM) - Centro de Investigacion Economica

Catalina Amuedo-Dorantes

San Diego State University - Department of Economics; IZA Institute of Labor Economics

Laura Juárez

Instituto Tecnológico Autónomo de México (ITAM)

Date Written: September 2016

Abstract

This paper examines the effects of non-contributory pension programs at the federal and state levels on Mexican households' saving patterns using micro data from the Mexican Income and Expenditure Survey. The federal program by itself appears to reduce the saving rate of households whose oldest member is either 18 to 54 or 65 to 69. State programs by themselves have no significant effects on household saving rates in the smallest localities, but in larger localities they may reduce the saving of households with members in their sixties. The combination of both types of programs generally does not have statistically significant effects on households' aggregate saving, probably because each program seems to affect different population strata. No significant effects are found for households whose oldest member is age-eligible (70 and older). Within specific investment categories, evidence is found of increases in human capital and in durable and financial goods for some age groups. Finally, the paper provides evidence on household-level labor supply responses.

Keywords: Non-contributory pensions, Saving, Mexico

JEL Classification: D14, H55, J26, O12

Suggested Citation

Alonso Ortiz, Jorge and Amuedo-Dorantes, Catalina and Juárez, Laura, The Effect of Non-Contributory Pensions on Saving in Mexico (September 2016). IDB Working Paper No. IDB-WP-630. Available at SSRN: https://ssrn.com/abstract=2956679 or http://dx.doi.org/10.2139/ssrn.2956679

Jorge Alonso Ortiz (Contact Author)

Instituto Tecnológico Autónomo de México (ITAM) - Centro de Investigacion Economica ( email )

Av. Camino a Santa Teresa #930
Col. Heroes de Padierna
Mexico City, D.F. 10370
Mexico

Catalina Amuedo-Dorantes

San Diego State University - Department of Economics ( email )

5500 Campanile Drive
San Diego, CA 92182
United States
619-594-1663 (Phone)
619-594-5062 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Laura Juárez

Instituto Tecnológico Autónomo de México (ITAM) ( email )

Av. Camino a Sta. Teresa 930
Col. Héroes de Padierna
Mexico City, D.F. 01000, Federal District 01080
Mexico

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